Fed’s Powell to update on economy and coronavirus crisis response
FILE PHOTO: U.S. Federal Reserve Chairman Jerome Powell speaks to reporters after the Federal Reserve cut interest rates in an emergency move designed to shield the world’s largest economy from the impact of the coronavirus, during a news conference in Washington, U.S., March 3, 2020. REUTERS/Kevin Lamarque/File Photo
April 9, 2020
By Howard Schneider
WASHINGTON (Reuters) – Federal Reserve Chair Jerome Powell – one of the key architects of the unprecedented effort underway to shield the U.S. economy from the coronavirus outbreak – may shed more light on the Fed’s assessment of the still-unfolding crisis in a live webcast on Thursday morning.
Hosted by the Brookings Institution in Washington, Powell will deliver prepared remarks at 10 a.m. (1400 GMT) and then participate in a virtual question and answer session to discuss the Fed’s moves last month to slash interest rates and enact a wide array of emergency measures.
Minutes released Wednesday from the Fed’s March meetings show the U.S. central bank’s officials encountered little disagreement over policy choices as they launched a historic economic rescue plan. However, officials also faced uncertainty over the risks confronting them and as they tried to stay ahead of the rapidly spreading virus and anticipate its effects on the world’s largest economy.
Late last month, Powell appeared on NBC’s Today Show in what was seen as an effort to both speak bluntly about the economic fallout from the crisis, but also to build public confidence that the Fed’s actions would help.
Communications are considered a key Fed policy tool, but appearances on nationally broadcast shows have been used only sparingly.
His appearance Thursday, at a think tank known for a detailed focus on monetary policy and economics, will be more the norm. It will be adapted, however, to the “social distancing” measures most officials are now following instead of being held before a live audience.
The health crisis has led to an unprecedented collapse of economic activity as the spread of the virus has forced governments to shut down commerce and either recommend or order people to stay home in an effort to slow its spread.
Unemployment claims, one of the clearest real-time indicators of economic conditions, spiked to a record 6 million for the week ended March 27, and millions more are expected to have filed last week. The latest data will be released Thursday morning.
Estimates of gross domestic product for the April to June period have been grim, with economists expecting a record decline of perhaps 20% or more on an annualized basis.
The Fed’s response is intended to temper the downturn, but perhaps more importantly to lay the groundwork for a faster recovery.
By keeping interest rates low and bolstering financial markets, the Fed hopes to ensure that companies and families get through the next few weeks or months without failing completely, defaulting on mortgages, or ending up unemployed over an extended period.
(Reporting by Howard Schneider; Editing by Dan Burns and Chizu Nomiyama)